As we begin a new year, one major question posed by property owners has dominated recent headlines in Harrisonburg:
Why have so many new student housing complexes been built within the last 10 years and how has it affected the overall rental market?
The question is a very valid one, but one that has a variety of factors affecting a clear answer. I will try to outline these and then discuss where property owners find themselves in the current market.
1. JMU has Grown... But Not As Fast as Many Projected: The growth of James Madison University cannot be understated; but the speed of it's growth has been. 10 years ago, in the fall of 2003, JMU's enrollment topped out at 15,769. Projections had the university approaching 20,000+ students sooner rather than later. Reaching the 20,000 student mark, however, took longer than expected, with the fall class of 2013 finally breaking that magic number. (Click here to look at full projections.)
2. Local Developers Had to Move Quickly Due to New Zoning: Many local landowners who planned to develop rental properties in the area were forced to do so to avoid a zoning crunch by the City of Harrisonburg. Because a new zoning classification was introduced, owners had a limited time to develop rental properties to ensure that they remained under existing zoning and to avoid more stringent policies under the zoning classification. This forced many people to begin construction faster than they would have preferred.
3. JMU Called . . . And the Developers Came: The numbers being projected in the mid-2000s were certainly enticing to developers. They descended on Harrisonburg in droves to build new complexes such as Campus View, City Exchange, Copper Beech, Charleston Townes, 865 East, North 38, and most recently, Rockingham County's first student housing complex Aspen Heights. Existing Properties already included Foxhills, Pheasant Run, Ashby Crossing (which was recently sold out of foreclosure and has been renamed University Fields), South View, Stone Gate, SunChase, Hunters Ridge Townhouses and Condos (the townhouses have since been renamed Camden Townes), The Mill, The Commons, Deer Run, and other smaller locations.
4. Small Owners Got Pinched: To keep up with the influx of new properties and enticing move-in deals, local owners dropped prices, began leasing to non-student residents in traditionally student populated areas, and took what they could get. Some went into foreclosure, or sold their properties for much less than market value.
How did this affect the rental market?
1. The student rental market was (and IS) currently flooded.
2. Rental rates are hard to pin down. New properties charge high rates, old properties are charging reduced rates, and some properties have been able to maintain rental rates. It's like hitting a moving target in some instances, based on the location and type of property.
3. Residential tenants have jumped on previous student rentals as the prices have dropped. This includes tenants with housing vouchers, large families, and/or a limited budget who can now rent more for their money with low occupancy in traditionally student complexes.
4. The residential market has also been affected, both in the proximity change in relation to new student complexes, and increased competition from traditional student properties who are now marketing to residential tenants.
It is certainly a complex situation, and there are many different aspects and viewpoints that make it a difficult one. If you are a property owner with questions about the market, feel free to call or email Riner Rentals anytime, and I will be happy to speak with you about the market, your rental property, or our management services (if desired).
Until next time,
Paul Riner, Riner Rentals